FlexTite manufactures plastic parts The inventory policy at

Flex-Tite manufactures plastic parts. The inventory policy at Flex-Tite is to hold inventory equal to 127% of the average monthly sales for its main product. Sales for the following year are expected to be 882,000 units. Based on the inventory policy, the budget calls for the production of 892,000 units.

Required: What is the beginning inventory of the component? (Do not round intermediate calculations.)

Solution

Average Monthly Sales = 882000/12= 73500 Required inventory = 73500*127%= 93345 Beginning inventory of the component = 93345-(892000-882000) = 83345